The article, published in Foreign Policy gives traction to the argument that Israeli settlement policies and lack of progress in peace talks endangers US troops in Iraq and Afghanistan.

. . . a team of senior military officers from the U.S. Central Command (responsible for overseeing American security interests in the Middle East), arrived at the Pentagon to brief Joint Chiefs of Staff Chairman Adm. Michael Mullen on the Israeli-Palestinian conflict. The team had been dispatched by CENTCOM commander Gen. David Petraeus to underline his growing worries at the lack of progress in resolving the issue. The 33-slide, 45-minute PowerPoint briefing stunned Mullen. The briefers reported that there was a growing perception among Arab leaders that the U.S. was incapable of standing up to Israel, that CENTCOM’s mostly Arab constituency was losing faith in American promises, that Israeli intransigence on the Israeli-Palestinian conflict was jeopardizing U.S. standing in the region, and that Mitchell himself was (as a senior Pentagon officer later bluntly described it) “too old, too slow … and too late.”

. . .

The message couldn't be plainer: Israel's intransigence could cost American lives.

But Max Boot disputes Perry's veracity. A military officer familiar with the Petraeus brief said the General "never recommended shifting the Palestinian territories to Centcom’s purview." Boot adds:

I further queried this officer as to whether he had ever heard Petraeus express the view imputed to him by Mark Perry — namely that Israel’s West Bank settlements are the biggest obstacle to a peace accord and that the lack of a peace accord is responsible for killing American soldiers. This officer told me that he had heard Petraeus say “the lack of progress in the Peace Process, for whatever reason, creates challenges in Centcom’s AOR [Area of Responsibility], especially for the more moderate governmental leaders,” and that’s a concern — one of many — but he did not suggest that Petraeus was mainly blaming Israel and its settlements for the lack of progress. They are, he said, “one of many issues, among which also is the unwillingness to recognize Israel and the unwillingness to confront the extremists who threaten Israelis.”

Reading between the lines of Perry’s piece and its later clarifications, there was a clear decision at high levels, apparently from within the Pentagon, to make this story public. If so, the leak was itself a policy decision, an effort by the military to throw itself publicly behind both the Petraeus warning and the sterner line taken in response by the Obama administration.

So is the Pentagon making a strategic shift? Winnipeg Free Press correspondent Sam Segev provides this interesting tea leaf to read:

Well-placed Israeli sources revealed that a similar message was conveyed recently to Israeli chief of general staff, Gen. Gaby Ashkenazi, by the chairman of the U.S. joint chiefs of staff, Admiral Michael Mullen. Mullen recently told Ashkenazi he met in January with a group of senior officers who are fighting in Iraq, Afghanistan and Pakistan. They told him various Arab leaders perceive America as a "weak" country that is losing its influence in the region. The Arab leaders cited "America's inability to stand up to Israel."

Well-placed Israeli sources revealed that a similar message was conveyed recently to Israeli chief of general staff, Gen. Gaby Ashkenazi, by the chairman of the U.S. joint chiefs of staff, Admiral Michael Mullen. Mullen recently told Ashkenazi he met in January with a group of senior officers who are fighting in Iraq, Afghanistan and Pakistan. They told him various Arab leaders perceive America as a “weak” country that is losing its influence in the region. The Arab leaders cited “America’s inability to stand up to Israel.”
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So this view comes from arab leaders. What can one expect from arab leaders other than to blame Israel?
If America is projecting weakness in the region, it is because of its inability to stand up to muslims and this administration’s appeasement of our enemies.